We are accountants who occasionally come across QB, we would be grateful for any advice on this problem:

We have a new client who is using QB for a retail shop, started in May 2005. We have just received a backup of transactions to date and there seems to be a problem:

They are registered for VAT and have prepared the first quarter VAT return. They have set QB to track VAT but all of the entries seem to be posted to the trial balance gross (VAT inclusive) although QB has tracked the VAT and they were able to prepare a VAT return.

They are not using the sales/purchase ledgers, just recording payments using the "write cheque" window and daily takings as cash receipts. They were using cash accing but we suggested that they use accrual, so that they can track the VAT properly. However, there is no VAT control acc in the chart of accounts and no entries made to it because the VAT has been entered into the relevant nominal ledger accounts as mentioned above.

Is this happening because they are entering transactions as bank account entries rather than entering invoices and then "paying" them? I can see how to adjust QB for the position to date, but can't see how they should enter future transactions, are their options either to split the "write cheque" entry into 2 transactions, one being posted to VAT or to enter the day's takings as a sales invoice and then enter the banking as a "payment"?

Sorry that this is longwinded and probably doesn't make a lot of sense to someone else, but any suggestions would be gratefully received - I can't believe that the software can be this inflexible, presumably we are missing something obvious??

First. Make sure that they haven't got hold of a non UK version of QB.

Second. Check that QB is set up to track VAT. Edit - Preferences - VAT - Company Preferences Tab - Tick Yes and enter the VAT Reg No and VAT accounting period. If this is set there should be a VAT column on most data entry screens.

Third. Make sure that the VAT codes are set up correctly. Lists - VAT Codes Lists. And that they are using the correct codes when entering purchases.

Can't work out what you mean by "Cash Receipts". There is a Make Deposits screen which doesn't have a VAT column. They shouldn't use this but they should use "Sales Receipts". This should have a VAT column.

Write Cheques does include a VAT column so the VAT on purchases should all be entered easily on this screen.

There should be a VAT Control Account. It is possible it has been made Inactive. On the Chart of Accounts screen go to Account Tab at bottom and select Show Inactive Accounts. If it is marked as inactive with a cross you can change it to Active.

If the above don't solve the problem, post again and I'll try to think of something else.

If you can solve the problem of why there is a VAT account on the chart of accounts then.......

I use QB to record retails takings.

They are right to use the cash receipts and is easy if everything they sell is VAT rated.

I created an item called retail sales and a name "shop sales". Then use these in the cash receipts window. The "amounts inc VAT" box must be ticked.

If they want reports to break down the sales further create more items. I have Shop Sales: Monday etc so that I can compare different days using reports as well as viewing whole weeks.

The set up is such that sales get posted to what I call my cash in hand account - type bank. When I go to the bank the banked amounts I enter into this cash in hand account. There is a nice little check on this account going down to zero all the time - I also reconcile it so that if one time it does not go down to zero I am only looking at one relevent to the error.

Any cash purchases from using money before it gets to the bank are entered into the cash in hand or depending on what has happened I transfer money to the petty cash account and record them there.

I found the least error prone and fastest method was to create a memorised transaction with the amount set at £0 that occurs for each trading day as a recurring standing order. (In my case separate ones for Shop Sales:Monday etc).

This gets rid of data entry errors on things like the date. I simply click on the transaction in my "cash in hand" account alter the amount and resave it. Takes seconds each time and no mess ups ever since I change to the recurring memorised method.

In my version of QB there is no such thing as Cash Receipts; there is Sales Receipts which I agree is what they should be using. I was concerned that they were entering cash takings straight into Make Deposits where there is no facility to enter VAT.

I have checked my copy and QB is set to track VAT and the VAT control account is active in the chart of accounts.
The strange thing is that there is a balance on the vat control acc in the chart of accounts, but the balance does not show on the trial balance. On the tb fixed assets etc are shown including vat, but they are net on the chart of accounts screen.

If I look at say purchases on the tb they show £117.50, if I drill into the transaction it shows £100 purchase and 17.50 VAT, which is recorded in the vat control acc on the chart of accs but not on the tb. I know that the client did not turn on the vat tracking etc in the first months, but this has happened in even the August entries.

They are recording daily takings to a bank type account called "cash drawer" using a different line for each vat type of takings. The vat is recorded and it's in the vat control acc for vat return purposes - just doesn't show on the tb and any reports that I produce by drilling down into the tb.

Is it something to do with the tb report? I've looked at the filters etc, but there don't seem to be any settings for vat.
One thing I did notice in VAT prefs - the show sales figures gross box is ticked - is this the source of the problem? I assume not since all transactions, both income and expenses are affected.